A supermarket in the French capital, Paris (getty)
Inflation continues to terrify investors in European and American markets, despite its significant decline from its high rates last year, from above 10% to 3% in the United States last July.
In the euro area, investors believe that the European Central Bank will find it difficult to return inflation to the target level of 2 percent, despite the continuation of the policy of raising interest rates on the euro.
According to a report in the British newspaper “Financial Times” today, Wednesday, the so-called forward inflation swap for a period of five years, which is a measure of market assessment of price growth during the second half of the next decade, reached 2.66 percent, despite indications that the current wave of inflation has reached its peak. With monetary policy tightening take effect.
Inflation expectations have risen in most major economies in recent weeks, driven in part by higher oil prices.
But rising inflation has been particularly noticeable in the eurozone, where it remained below the European Central Bank’s target in the decade after the 2008 financial crisis, leading to widespread predictions that the region is heading for Japanese-style stagflation.
In this regard, the head of the macro department at the Lombard-Odier bank, Florian Elbault, said in comments to the “Financial Times”: “Inflation in the euro area may reach an average of 1.5 percentage points higher in the years to 2032 than it was in the previous ten years. Rising energy and commodity prices, exacerbated by the Russian invasion of Ukraine, are feeding on wage demands.
He adds that the increase in long-term inflation expectations is uncomfortable for the European Central Bank, which has signaled it is nearing the end of the tightening cycle after delivering nine consecutive interest rate hikes, pushing the deposit rate to a 22-year high of 3.75 per dollar.
In New York, according to recent data issued by the Federal Reserve Bank of New York, Americans rely on their credit cards more than ever in spending, which fuels the steady increase in consumer spending, which may push inflation to rise again, and thus affect the economy. interest decision later.
Investors are awaiting US inflation data due this week to get a clearer picture on the prospects for raising interest rates.
Should a larger-than-expected rise in consumer prices be reported in the data, it could increase the possibility of another rate hike when the US Federal Reserve meets in September.
The amount of consumer credit card debt in America increased by 4.6% in the second quarter to a record level of $ 1.03 trillion, compared to $ 986 million in the first quarter. Consumer credit card debt passed the $1 trillion mark for the first time ever.
2023-08-09 11:47:02
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